Panarchy and the Infinite Cycles of Change

If you have ever wondered why your organization seems to be in continuous flux you are not alone. In fact while change has always been part of organizational life, what has changed considerably over the last decade or two is the speed of this change.

One way to understand this change is to look at an archetypical lifecycle for an organizational system. Then we can understand the factors driving change and be able to understand and better work with each stage of the cycle.

One model that may be useful to understand the lifecycle of an organizational systems comes from the field of ecology. While this was originally developed to explain the life-cycle of natural systems, there are many parallels for human complex systems such as organizations.

Developed by Holling (2001), Panarchy describes how each complex system is continuously moving through four stages of exploitation, conservation, release and reorganization.

For organizations, exploitation begins the moment a business idea starts building on its potential. In organizations this looks like a growth spurt. You have identified the right idea and what remains for you to do is to exploit that idea to its fullest. This usually means putting together the resources required to get your product to its customer, and then building sales along a trajectory that you have begun to understand.

This is a very enjoyable phase to be. When an idea happens to be the right idea at the right time, what is needed is great execution, and the idea will grow to its potential.

There will then be a stage when that particular business idea reaches its maturity. Growth continues but slows down. Several competing products emerge and competition becomes tough. As growth becomes incremental, the focus of the system moves to conservation of resources or efficiency.

Most viable business organizations spend most of their lifecycle in either of these two phases: exploitation or conservation.

As an organizations resources get locked into one efficient business organization, however, the organization now becomes vulnerable to disruptive change. Depending on the scale of disruption, this many mean that the original business idea no longer has potential, and the organization’s resources devoted to that idea need to be decoupled from it.

This stage is experienced as a disruption. Usually far faster than either exploitation or conservation, release marks the end for the business idea.

The next stage marks a potential reorganization of resources. If successful, this once again feeds into the cycle of exploitation and conservation and if unsuccessful, potentially points to the exit of the organization.

Organizational systems have always cycled through these stages of exploitation, conservation, release and reorganization. That is not new. What has changed however in the last few decades is the speed of disruption.

The accelerating pace of technological change and the forces of globalization are forcing organizations to cycle through the different phases faster than ever before, leaving most organizations and its members feeling the impact of constant change and transformation.